Kris Alingod – AHN News Contributor
Washington, DC, United States (AHN) – Legislation ending tax breaks for U.S. companies that outsource and providing tax incentives to those that move jobs back home failed in the Senate on Tuesday.
Democrats were short of the 60 votes required to overcome a Republican filibuster of the measure, Creating American Jobs and Ending Offshoring Act. By a vote of 53-45, the GOP blocked the bill with the help of three Democrats and Sen. Joe Lieberman (I-CT).
“This is about as pure a political exercise as you can get,” Senate Minority Leader Mitch McConnell (R-KY) said in a floor speech before the vote. “The way to get U.S. businesses to produce more here isn’t to tax them even further, it’s to stop punishing them with our high corporate tax rate.”
The legislation would have provided 24 months of payroll tax relief to businesses for each job brought back to the United States. The bill would have fixed tax loopholes that allowed employers to receive subsidies for ending their operations in the United States or expanding overseas.
Under the measure, the policy of deferral would be repealed. The policy allows companies to defer paying taxes on income of their foreign subsidies until this income is sent to the United States.
Democrats believe deferral put business with foreign counterparts at a competitive advantage over U.S. companies that employ Americans. But the ranking Republican in the Senate Finance Committee, Sen. Chuck Grassley (R-IA), argued, “There has been no finding that such income is often earned outside of the United States by a motivation to avoid U.S. tax.”
About 4.7 million manufacturing jobs were lost in the United States from 2001 through 2009, according to Sen. Debbie Stabenow (D-MI), whose state accounted for 1 million of those jobs.
“For too long, we have had policies in place that create the wrong kind of incentives and encourage businesses to ship jobs overseas,” Stabenow said in a statement after the bill failed. “If we don’t make things and grow things in America, we will never rebuild our middle class in our country.”
Democrats were hoping to pass a jobs bill this last week of session before lawmakers leave the Capitol to campaign for the general election. They were pushing hard earlier this month to pass a measure that would extend tax cuts for the middle class implemented in 2001 and 2003 during the Bush administration, but not those for earning more than $250,000 a year.
Republicans want to extend all the tax cuts, which are scheduled to expire in January. But they have had a difficult time gaining support for their proposal of making these tax cuts permanent for all, which would cost $3.7 trillion over 10 years.
The Democratic plan, extending the cuts to middle class families earning less than $250,000 a year, would cost $3 trillion.
Debate on the issue has grown increasingly vitriolic, with the unemployment rate at 9.6 percent, the mid-term elections looming and Republicans threatening to regain the majority in Congress.
Congress is due to hold a lame-duck session in November, and lawmakers are expected to take up the tax extensions when they return.
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